How many smartphones and mobile users are out there?

I really like this post from Benedict Evans over at A16Z. It’s fascinating to think how quickly the mobile user landscape is changing ~ and that means you really need to get your head around where the numbers are today, but more importantly (for an entrepreneur) to have a solid understanding of where they will be tomorrow…

Here’s a nice summary of the state of the mobile world in December 2014:

Mobile Penetration is above 100%

First, mobile penetration has now risen above 100% in most developed markets, because many people have more than one live connection: they have several prepaid SIMs to get the best coverage and to take advantage of on-network pricing deals, or just have one they don’t use much. This started happening well before things like dongles and tablets, which boost the total further but which are at least easy for mobile operators to split out. Hence, the number of connections globally is now well over 7bn but the number of people who actually have a mobile phone is rather lower.

3 Ways to Think About It

The first is to assume a replacement cycle for the number of unique mobile users – if 3.5bn people buy a phone every two years, then you get, say, 1.7-1.8bn units. This is really only valuable as a sanity check, though – there are rather too many assumptions being multiplied together for comfort.

The second is to look at the component players, most obviously ARM and Qualcomm but also newcomers like Mediatek and Spreadtrum, who sell to the vast majority of phone makers in one way or another (to simplify hugely) and therefore ought to know how many phones are being sold, and more importantly they also make consistent, regular public statements about how big they think the market is. Hence Qualcomm produces this estimate of 3G/4G device sales (of course, this includes tablets, dongles and M2M units as well as phones).

The catch here (besides the non-phone stuff included) is the note ‘estimated to be reported’ – that is, how many Qualcomm expects to be told about and have a license fee paid on, as opposed to how many will actually be sold. Some portion of Chinese manufacturers, for a range of complex reasons, are selling phones that they do not report to Qualcomm and pay royalties on. So even Qualcomm does not know what it is supposed to know.

The final avenue is that followed by some of the industry data firms, such as Gartner and IDC, which is to spend a lot of time in China talking to anyone and everyone – not just Qualcomm and ARM, but lots and lots of other component companies and handset manufacturers who don’t want to give public numbers for competitive reasons. Theoretically, if this is done properly, it should give a pretty solid number. In practice, these firms sometimes disagree by a significant amount and sometimes adjust their figures retrospectively – in other words, they’re still estimates. But they do give a sense of the general market size and direction.

iOS Devices

So, Apple has reported selling a cumulative total of 827.7m iPhones and iPads by September 2014, and given indications that lead me to estimate the iPod Touch number as a bit over 100m. If we assume a 24m life this would give 480m live devices. For a bunch of reasons, this seems too low. It is very clear that iPads are not replaced every two years, while the size of the second-hand market for iPhones (especially in China) and the number of iPhone 4 and 4S units still apparent in the base from traffic data also indicate a longer lifespan. So, I’ve estimated 3 years for the iPod Touch and the iPad and 2.75 years for the iPhone, which gives an active number of 640m devices. Add in a rise in iPhone sales for December and a fall in iPad sales, and the number rises to 650-675m.

Quite an interesting and helpful piece from Ben, check it out in full here